Frequently
Asked QuestionsQ. Should I refinance now, even if I have
to pay a fee?A. Calculate how long it will take you to break even. There
are typically fees associated with a mortgage refinance. To
figure out if those fees make it worth it to refinance your
mortgage, calculate how long it will take you to break even.
For instance, if it costs you $900 in fees, and refinancing
lowers your monthly mortgage payment by $70, it will take you
15 months to recover the cost of refinancing. If you’re
not going to stay in the home that long, it may not make sense
to refinance.

Q. How do I know how much house I can afford?A. Generally speaking, you can purchase a home with a value
of two or three times your annual household income. However,
the amount that you can borrow will also depend upon your
employment history, credit history, current savings and
debts, and the amount of down payment you are willing to
make. You may also be able to take advantage of special
loan programs for first time buyers to purchase a home
with a higher value. Give us a call, and we can help you
determine exactly how much you can afford.

Q. Which is better
a fixed or adjustable rate?A. Before you refinance, you should consider all your options.
A fixed rate mortgage stays the same for the entire length
of the loan, while the interest rate of an adjustable rate
mortgage changes with the market over time. Although an
adjustable rate mortgage might offer lower payments initially,
if rates go up, your payment will, too. You should carefully
analyze your needs before choosing a new loan product.

Q.
What is a prepayment penalty?A. Some lenders include a prepayment penalty – a fee
for early pay-off – in their mortgage loan terms. Make
sure you address this issue directly with your loan officer,
as some lenders will charge a substantial fee for early loan
payoff.

Q. I have a first and second mortgage. Should I refinance
both?A. If you’re paying high interest on a second mortgage,
consider rolling it into your new mortgage when you refinance.

Q.
What is PMI? Will I need to pay it?A. If you have less than 20% equity in your home, you may
be required to pay mortgage insurance (PMI). This insurance
protects the lender, should they need to foreclose on your
loan, and can be paid monthly, or in one lump sum. The
cost of mortgage insurance is something to consider if
you’re thinking about tapping into your home’s
equity and increasing the amount of your new loan.